Super fee disclosure guide will bamboozle consumers: ISA
The Australian Securities and Investment Commission’s (ASIC’s) attempt to improve disclosure of superannuation investment fees and costs is a welcome step forward, but does not fix the issues with RG 97, according to Industry Super Australia (ISA).
Dr Nick Coates, ISA’s head of research, said while the release of ASIC’s updated RG 97 guide was important to improve transparency, it doesn’t deliver clarity consumers need to make decisions as well as fees and cost comparisons.
“While we welcome steps taken by ASIC to improve transparency when it comes to fees and costs, this latest guide doesn’t go far enough when it comes to providing clear and simple comparisons between the bank products and other super funds, and we worry this will impact APRA’s heatmaps that are based on RG 97,” Coates said.
This ‘net returns measure’ would allow consumers to compare apples with apples across various funds and products.
In its submission to ASIC on RG 97, the new guide related to platforms owned by banks and investment managers, where they were only required to disclose the cost of gaining access to a product, not the cost charged by those issuing it.
“We needed to see the banks’ super fund platforms product costs all in one place so consumers could compare them against cheaper run funds,” Coates said.
“Instead we have ended up with a situation where they are expected to volunteer to provide example disclosure, it’s fanciful.”
The Financial Services Council (FSC) had welcomed the move, but were disappointed their request for a longer timeframe for compliance had not been granted in the update.
Sally Loane, FSC chief executive, said they were pleased with the updated rules increased comparability and clarity of disclosure, which included changes for how some fees and costs categories are grouped together.
“Consistency in reporting of superannuation fees is crucial to ensure consumers can meaningfully compare products and make informed choices about their retirement savings,” Loane said.
Loane said they would engage with ASIC over the coming months to ensure the industry had a disclosure framework that provide transparent, comparable information that promoted consumer trust.
“The FSC’s submission earlier this year pressed strongly for a longer timeframe for compliance, particularly in the case of PDSs [product disclosure statements]," Loane said.
"We submitted that this was necessary to accommodate the extensive system, data gathering and disclosure changes – the shorter timeframe will create added pressure and risk for businesses implementing the new rules."
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